Earlier this morning, Shopify (SHOP), the owner and operator of a cloud-based platform that enables merchants to sell online and offline, reported yet another impressive beat-and-raise quarterly report. And as we discuss in more detail below, anything short of perfection likely would not have been enough for this stock, due to its ultra-rich valuation. However, SHOP once again delivered, earning that premium valuation.
Broadly speaking, SHOP has been and continues to benefit from the migration from brick-and-mortar retail to online and mobile shopping. In order to remain competitive, merchants and retailers are realizing that a prominent online and mobile footprint is vital. Which is where SHOP comes in.
For those unfamiliar with the company, SHOP primarily focuses on small and medium businesses, enabling them to offer e-commerce services while also providing a single view of their business and customers across all of their sales channels. So, not only does it help to drive stronger revenue on the e-commerce side, but, its customers are also able to better manage their inventory, process orders and payments, and access customer data and analytics.
A significant catalyst for the company has been its ability to secure needle-moving partnerships with large tech companies. For instance, last July, SHOP announced its merchants would be able to list and sell products on EBay (EBAY), directly through their Shopify accounts. This came on the heels of other substantial partnerships, including with Amazon, Facebook, and Pinterest. As for EBay, that sales channel was officially launched and available on October 30, which means 4Q17 was the first quarter to see a full impact from the EBay channel.
Taking a closer look at those results, EPS was $0.15, easily topping the $0.05 Capital IQ Consensus. The $0.15/share in EPS is also a vast improvement over the year ago period when SHOP was break-even. Furthermore, SHOP has strung together eleven straight top and bottom line beats -- oftentimes, by comfortable amounts.
As for the topline, revenue surged by 71% to $222.8 million, well ahead of the $209.7 million consensus. In addition to the consistent outperformance, another feature that stands out about SHOP is its steady, high double-digit revenue growth. Since 2Q15, revenue growth has only decelerated from 90% to 71%. It is quite rare for a company of this size ($13.8 billion market cap) to sustain that level of growth over a multi-year period.
Not surprisingly, the underlying metrics are all very healthy as well. Gross Merchandise Volume (GMV) jumped by 65% year/year to $9.1 billion, with the four days comprising of Black Friday - Cyber Monday accounting for $1.0 billion of the total. Monthly Recurring Revenue increased by 62% to $29.9 million with the higher-margin "Shopify Plus" product contributing 21% of that total.
To top off the impressive upside Q4 results, SHOP also once again issue upside guidance for 1Q18 and FY18, guiding for Q1 revenue of $198-$202 million vs. the $195.7 million consensus, and FY18 revenue of $970-$990 million vs. the $956.9 million consensus.
The results across the board were very strong. But, as we alluded to above, SHOP needed to knock it out of the park. At the moment, the stock is trading with a sky-high 1-year Forward P/S of about 14x. That leaves no wiggle room for error as expectations for SHOP are through the roof. But, so far, the company's exceptional performance and growth has justified that exorbitant valuation. The risk, of course, is whether its performance can keep pace with that valuation.